Amid the South Korean government announcing plans to support blockchain technology development, it seems to need some more time to allow initial coin offerings (ICO).
At a briefing session on IT and fintech supervisig inspection tasks in 2018 on March 9, the Financial Supervisory Service (FSS) announced plans to revitalize the blockchain technology, including the introduction of blockchain technologies in the domestic financial industry by taking part in global blockchain consortiums, the analysis of blockchain technology introduction cases and the review of ways to promote them, the establishment of an advisory committee consisting of outside experts, and monitoring of deposit and withdrawal services under the real-name system to improve transparency of cryptocurrency trading.
The government has continuously said to promote the blockchain technology apart from regulations to secure soundness of cryptocurrency transactions. The Ministry of Science and ICT (MSIT) will inject 4.2 billion won (US$3.94 million) of budget this year to support actionable blockchain technology projects.
Apart from the government’s plans to promote the blockchain technology, however, market watchers stepped up their demands to lift an ICO ban.
An ICO is a controversial means of crowdfunding centered around cryptocurrency, which can be a source of capital for startup companies, just like an initial public offering (IPO) which attracts external funds by issuing companies’ stocks. In South Korea, the government banned an ICO in September last year by reason of unbridled trading in cryptocurrencies and bogus ICO.
Park Sung-joon, head of the Blockchain Research Center at Seoul's Dongguk University, said it is impossible to promote the blockchain technology with the government’s financial support alone so the government should allow an ICO. He said, “An ICO is banned only in South Korea and China. The government said it will make a 14 billion won (US$13.15 million) investment to promote the technology but it is a ridiculously small amount of money considering the fact that other countries are seeking to research and develop the technology by raising hundreds of millions of won through an ICO.”
Some say it is too early to allow an ICO. Won Jong-hyun, a legislation examiner at the National Assembly, said, “Currently, cryptocurrency trading market is not stable. We need more time because an IPO and other confounding fund raising methods will not be able to control risks of price fluctuations.”
Amid all the mixed opinions, an increasing number of companies are looking overseas for an IPO. Financial authorities launched an investigation into whether the nation’s listed firms have plans for an ICO or involve in ICO business abroad last month. However, they are having difficulties to grasp the facts because they don’t have the right to look into firms due to the cryptocurrency issue.